Greece is the crisis that won’t go away. The hapless nation’s economic and fiscal woes are really just a microcosm of what is facing the entire European Union. Debt levels are unsustainable, spending continues to be out of control and politicians attempt to place band aids on the problems, which will only make them worse in the long run.

Somewhere at the end of all this, Europe is going to be hit hard with an unprecedented economic and fiscal crisis.

Will it be touched off by a Greek default? Some observers think so. S&P has now downgraded the country’s credit rating to “selective default,” from the already lowly CCC rating.

A Greek default will not be kind to the financial markets. This is yet another crisis from which investors must protect their wealth with gold investments.

MYM blog readers may recall that Italy is in bad economic and fiscal shape. Italy’s problems are overshadowed by those of Greece and Spain, but, like much of Europe, Italy is in trouble as well.

One sign of that is the announcement this week that Standard & Poor’s has downgraded Monte dei Paschi di Siena, Italy’s–and the entire world’s–oldest bank, to junk status (BB+).

The bank has been around since 1472–20 years before Columbus voyaged to the New World.

A track record going back nearly 600 years is not enough for investors to depend on in today’s uncertain world. Investors would do better to depend upon an asset that has a track record of security and stability that is 10 times as long as that: GOLD.

That was the day the stock market crashed. The Dow fell over 500 points/23% in one day. The crash was a culmination of a decline that had started in August.

It is important to note that gold served as the best source of liquidity during that crisis and increased in price between October and the end of 1987.

We bring this up because there is an important article on Marketwatch that points out distinct parallels between the conditions that existed in 1987 and today:

Current drop echoes 1987 crash prelude

By Jon D. Markman

The Dow Jones Industrials have fallen 450 points over the past two days, and a lot of the blame has been placed on the re-election of the president. But anyone paying attention to the market over the past three months recognizes that the peak was actually made the week that the Federal Reserve announced a third round of quantitative easing. That was expected to be a positive event, but in retrospect, it ushered in a rolling thunder of value-eroding news events.

Soon after began a very underwhelming earnings reporting season, word of a deepening industrial slump in China, a broadening recession in Europe and the martyrdom of Spain. And then this week it suddenly dawned on people that if U.S. lawmakers can’t stop acting like stuck-up brats, then $1.2 trillion worth of ham-handed spending cuts and tax increases are about toplotz on red states and blue states alike in the coming year.

Independent estimates suggest that would shave four percentage points off GDP faster than you can say “sequestration,” or “defenestration” for that matter, and lead to millions of lost jobs. It looks like the president would be OK with that, since he booked a tour of Myanmar for next week.

In short, the election put an exclamation mark on a parade of indignities, but it is far from the only proximate cause. Investors have liquidated U.S. assets for a while; it’s just more noticeable this week.

Less attention has been paid to the euro–that common European currency started in the late 1990s. The euro is very nearly as significant to the global economy and financial system as the dollar. That’s because the combined economies that make up the European Union are on a par with the US economy in terms of size. And if you look at Europe, you see clearly that their fiscal and monetary policies are very similar to those of the US.

What all this boils down to is that both the dollar and the euro are built on shifting sands. Neither can be considered a long-term viable alternative to the other. Each may benefit in the short-term from trouble in the other, but, over the long-term both of these currencies are shackled by much more fundamental problems.

This is especially significant in view of a recent article published by The Telegraph in the UK which describes the euro’s troubles in detail and proclaims that the euro is entering an era of permanent depression:

Investors must not put their trust in man-made paper currencies. Man has the tendency to grossly overproduce when it comes to money. That is happening in the dollar and the euro right now and has been for some time. But men and governments cannot print any more gold. Gold is the ultimate form of real money and has been for 5000 years. Investors need gold to balance a portfolio overweight in paper to provide the diversification and performance potential that only gold can provide when governments undermine the value of their national currencies…

While all of the attention seems focused on the USA due to our presidential election, the world economy may be what matters most–and nothing that the next president of the United States can do will necessarily save the entire world from itself.

Take Europe as an example. Europe has been careening toward crisis for two years now. The European Union has repeatedly applied band aids in attempts to correct the underlying problems, but those band aids have never been enough.

Now we are in a situation where two of Europe’s problem nations, Spain and Greece, both have unemployment at over 25%. These are simply depression levels. And even supposedly, relatively healthy Britain now has unemployment at record levels.

In today’s interconnected, globalized economic and financial system, there is simply no way that the acute problems in Europe can be limited to Europe. Make no mistake, their presence will be felt here in the US, in our financial markets. Many US companies are dependent on overseas markets for sales of their goods and services. Others are dependent on overseas markets for equity ownership stakes.

The continuing European crisis is one which investors cannot ignore. They must diversify into assets that have historically performed well when other assets suffer. Gold investments are ideal for that purpose.

Just when many investors assumed that they could forget about Europe, news from across the Atlantic has cropped up again–and that news is not good.

The European Union has supposedly taken action to “solve” the fiscal, monetary and economic crises plaguing Spain and Greece, but the fact is, both countries are still in dire financial straits.

The unemployment report from Greece came in and fully 25% of Greece’s workforce is unemployed. There is only one word that can describe that sorry situation: DEPRESSION.

Meanwhile, in Spain, the news was no better.

Standard & Poor’s downgraded Spain’s credit rating two notches (again) to just one level above junk status. This will raise the cost of borrowing for Spain and is a reflection that past band aids put on by the European Union have not solved that nation’s problems.

What all this means to investors is that, though the financial world is oblivious now, it won’t be able to remain oblivious forever. And though right now investors are not seeking the safe haven of gold due to the European crisis, we can be sure that eventually they will.

The International Monetary Fund is back issuing warnings about the global economy and investors best heed those warnings. The IMF may be controversial in many ways, but when it comes to the individual investor’s perspective, they don’t really have an axe to grind.

The IMF cut its global growth forecasts as the euro area’s debt crisis intensifies. This comes as a bit of a shock to many observers since the European crisis has been pushed to the back burner by the US presidential election and Middle East issues. This is a stark warning that Europe is still sick and not in recovery.

What all this means to investors is that the global economy is fragile and when the economy is fragile, the financial markets are under duress as well.

That requires action, specifically acquiring investment assets that can provide a hedge against turmoil. Hard assets, particularly gold investments, are ideally suited for that purpose. And when it comes to gold investments, rare gold coins offer a unique combination of performance and security benefits.